Developing countries see drop in private infra investment

Decreased spending in Turkey, Brazil and India led total private investment to drop 37% last year, according to the World Bank.

Private sector infrastructure investment in the developing world dropped to $71 billion in 2016, a 37 percent decrease from the previous year and its lowest level in a decade, the World Bank said.

The drop came from a steep decrease in transportation investment as well as declines in spending in Turkey, South Africa and Peru, the institution stated in a report.

Turkey in particular had seen a banner year in 2015, when the $35.6 billion IGA Airport in Istanbul reached financial close; that project alone accounted for most of the $42.3 billion year-on-year fall in investment.

But last year’s downturn represents more than the results of one deal. The total was also well below the $121 billion annual average seen from 2011 to 2015. And the number of projects reaching financial close fell sharply to 242 last year, down from 334 in 2015 and an average of 421 in the five preceding years.

Investments in transportation, the largest sector in 2014 and 2015, fell to $25.7 billion last year, less than half its five-year average. Airport investment saw the most dramatic decline, totalling just $25 million after averaging $14.32 billion from 2011 to 2015. Water and sewage investments dropped to $1.9 billion, 53 percent below its five-year average.

One bright spot in the World Bank report came in the energy sector, which totalled $43.8 billion in investment, an uptick of 11.5 percent from 2015. This was driven by renewables, which comprised 88 percent of the 144 energy projects that saw private investment last year.

Regionally, East Asia and Latin America saw the highest levels of investment, with $33.2 billion and $24.8 billion respectively. East Asia was the only region with increased investment activity in 2016, due in part to the success of China’s recently launched PPP initiative. The country saw $11.4 billion in private investment last year, second only to Brazil’s $15.2 billion. Colombia, Indonesia and the Philippines were also among the five countries with the highest levels of private investment.